Hostess Brands is Closed

[David Jamieson]

Too bad we can't outsource the obesity and diabetes that comes with it.

I think we all know by now that we can't legislate against stupidity and if there is one thing our fellow men have in abundance, it is that.

[Syn7]

Bankruptcy judge talked them into continuing talks. So it ain't over yet. Personally, I think this is all starting to look like a well planned con on the union. Take our deal or we'll shut down. No, ok we'll shut down then. Fine. No wait, really? Ok we can talk!

I wish these owners were as patriotic as they pretend to be. If the countries captains of industry put country first, the US would be a powerhouse like never seen before. Your own values are killing all the great work that those before us put in to make the US what it is.

[GeneChing]

I'm not buying the top dogs calling out the workers for striking. There's been a lot of web memes (especially on facebook) about how the fat cats took all these raises and bonuses while the workers suffered so much that they went on strike. Same old story.

I'd like to think that it's also a result of consumers being a little smarter nowadays. When Hostess began, there was all this new science going into food production - ways of making stuff more cheaply - even though a lot of it was toxic in the long run. Frankenfoods were all the fashion and the subsequent generation paid the price. It's like that old riddle: Q: "What did we call organic farming prior to the 1950s? A: Farming." Now (I hope) people are realizing that you can't cheat on nutrition.

Of course, I'm sorry for the loss of American jobs, but it is a junk food institution that can be moved out to countries that are more junk food friendly. Mexico, Canada, heck why not China? Ok, I'm just joking about that.

Last chance for Hostess Brands: Mediation
By Chris Isidore @CNNMoney November 20, 2012: 11:56 AM ET

NEW YORK (CNNMoney) -- Management at Hostess Brands and leaders of the Bakery Workers union may agree on only one thing heading into mediation Tuesday -- neither expected to be there.

The results of the mediation, scheduled for 1 p.m. Tuesday., will determine if the company and its 18,500 jobs can be saved. If not, Tuesday's session will prove to be only a slight detour on the way to liquidation for the maker of such iconic products as Twinkies, Wonder Bread and Drake's snacks.

The mediation session was essentially ordered by U.S. Bankruptcy Court Judge Robert Drain, who will also oversee the meeting. He said he wanted to try to do everything he could to try to find a deal before he ruled on the company's motion to liquidate.

"My desire to do this is prompted primarily by the possibility of the loss of 18,000 jobs," he said during the hearing Monday afternoon.

Hostess is on the brink of closing after years of losses and a strike started on Nov. 9 by the Bakery Workers, which represents 5,000 workers at the company. The union insists that membership voted 90% against the concessions imposed on them by the company as part of its bankruptcy, concessions other workers agreed to accept.

The Bakery Workers union held the votes on the concessions during public meetings at union halls. But the Teamsters union let its 6,700 members vote using a secret ballot, and members voted 53% to accept the concessions. Last week, as the company threatened liquidation, the Teamsters asked that the Bakery Workers hold a secret ballot vote on the concessions, in the hopes that the bakers might be more willing to accept management's terms in private to avoid a shutdown.

On Monday after the mediation was ordered, the Teamsters union said it would do everything it could to help the two sides reach a deal to save the company

"We are hopeful that the bakers' union and the management team can find common ground during this mediation and avert liquidation," said Teamsters General Secretary-Treasurer Ken Hall. "It is in the best interest of all parties involved that we remember what is at stake -- the future of 18,500 workers and their families. This is not only about a brand or a product, it is also about real people that just want to work hard every day to provide for their families."

If the company goes into liquidation, its brands and recipes will be sold off to raise funds to pay its creditors. On Monday, private equity firm Sun Capital Partners told Fortune that it wants to buy Hostess as a going concern. It would reopen the shuttered factories, and keep the Hostess workers and their unions. But it's not clear Sun Capital's offer would top those of other bidders who would simply produce the product with the bidders' existing staff and facilities, leaving the Hostess workers out of luck.

Company attorneys told Drain Monday that the strike had already cost it too much money to restart operations.

Experts say it is extremely rare for a bankruptcy judge to refuse to sign off on a company's motion to liquidate. Heidi Sorvino, a bankruptcy attorney at Hodgson Russ in New York, said companies typically have close to an absolute right to liquidate. And Drain is set to rule on the company's liquidation motion Wednesday morning if there isn't progress made in mediation Tuesday afternoon.

Labor experts say that saving the company will be a long shot.

"I would not be overly hopeful," said Ann Hodges, a labor law professor at the University of Richmond. "There was a real lack of trust by both parties. The company is ready to go to liquidation. The union is willing to push the company into liquidation. Why would there be anything different now?"

But some of the employees said Tuesday they are hoping for an 11th hour reprieve.

"I'm glad the judge kind of told them to try to work things out," said Alex Dolah, a Bronx, NY driver with seven years at the company. "I really don't want to get my hopes up. I have to look for a job, and think about what I'm going to do if they don't work it out. But inside of me, I've got my hopes up." To top of page


First Published: November 20, 2012: 11:14 AM ET

Hostess Blames Union For Bankruptcy After Tripling CEO’s Pay
By Annie-Rose Strasser on Nov 16, 2012 at 3:50 pm

Today, Hostess Brands inc. — the company famed for its sickly sweet dessert snacks like Twinkies and Sno Balls — announced they’d be shuttering after more than eighty years of production.

But while headlines have been quick to blame unions for the downfall of the company there’s actually more to the story: While the company was filing for bankruptcy, for the second time, earlier this year, it actually tripled its CEO’s pay, and increased other executives’ compensation by as much as 80 percent.

At the time, creditors warned that the decision signaled an attempt to “sidestep” bankruptcy rules, potentially as a means for trying to keep the executive at a failing company. The Confectionery, Tobacco Workers & Grain Millers International Union pointed this out in their written reaction to the news that the business is closing:

BCTGM members are well aware that as the company was preparing to file for bankruptcy earlier this year, the then CEO of Hostess was awarded a 300 percent raise (from approximately $750,000 to $2,550,000) and at least nine other top executives of the company received massive pay raises. One such executive received a pay increase from $500,000 to $900,000 and another received one taking his salary from $375,000 to $656,256.

Certainly, the company agreed to an out-sized pension debt, but the decision to pay executives more while scorning employee contracts during a bankruptcy reflects a lack of good managerial judgement.

It also follows a trend of rising CEO pay in times of economic difficulty. At the manufacturing company Caterpillar, for example, they froze workers’ pay while boosting their CEO’s pay to $17 million. And at Citigroup, CEO Vikram Pandit received $6.7 million for crashing his company, walking off with $260 million after the business lost 88 percent of its value.

[Syn7]

You really think Canada and Mexico are more junk food friendly than the US?

I agree. The jobs part sucks. But if all these crap making companies disappeared tomorrow, the world would be a better place.

[GeneChing]

You really think Canada and Mexico are more junk food friendly than the US?

However I do think that Mexico and China have less regulations, so they're free to make their junk food out of actual junk. That would be much cheaper for twinkies, and probably more flavorful.

[Syn7]

Well, in Canada Hostess products will still be produced and sold. Twinkies will not be leaving Canada over this fiasco. I dunno if thats cause Hostess has a Canada division that is a separate entity or somebody is licensed to produce and sell Hostess products.

[Bacon]

Well, in Canada Hostess products will still be produced and sold. Twinkies will not be leaving Canada over this fiasco. I dunno if thats cause Hostess has a Canada division that is a separate entity or somebody is licensed to produce and sell Hostess products.

Oh dear sweet Twinkie Jesus there is a god!!!!

[Syn7]

I can't even remember the last time I ate simulated food.

[David Jamieson]

Well, in Canada Hostess products will still be produced and sold. Twinkies will not be leaving Canada over this fiasco. I dunno if thats cause Hostess has a Canada division that is a separate entity or somebody is licensed to produce and sell Hostess products.

Saputo in Montreal has the license for the twinkies in Canuckistan and George Weston (weston bakeries) holds the license for their other products as well such as wonderbread, dingdongs etc.

I can't believe twinkies would be a hot topic on a kung fu board.....lol

[mawali]

Dingdongs are far better than Twinkies! or is that Donky Kong? I can never tell the difference

I am shocked but not surprised that they blame the unions. It is all part of the Grand Strategy. Their balance sheet / revenue over the last 5 years would give a better indication plus, the unions have been giving concession for longer but they fail to mention that CEO pay (during non performance) increased 5-20% and more.

[GeneChing]

I can't believe twinkies would be a hot topic on a kung fu board.....lol

When this started trending, I knew it would be popular here. The OT forum is our wastebasket, so what better place for junk food?

[Syn7]

Saputo in Montreal has the license for the twinkies in Canuckistan and George Weston (weston bakeries) holds the license for their other products as well such as wonderbread, dingdongs etc.

I can't believe twinkies would be a hot topic on a kung fu board.....lol

Yeah, saw that on the news last night.
I do admit, even if I don't eat wonderbread, I find the packaging nostalgic.